Leverage is unwinding across Asia
The borrowing that fueled this year's rally is now accelerating the selloff. In South Korea, margin debt has fallen by $4 billion since June, while leveraged ETF assets have plunged 70% (from $53 billion to $16 billion). Retail cash set aside for stock purchases has dropped 23%, and many Samsung and SK Hynix investors are now sitting on losses. The deleveraging is spreading across the region, with margin loans also falling sharply in China and Taiwan. As leveraged positions are unwound, forced selling is amplifying market volatility. Source: Global Markets Investor
Japan will use the International Repo Facility in the future to boost the Yen and avoid having to sell U.S. Treasuries
Source: Barchart
South Korea's Stock Market has plunged more than 33% this month
It is on track for its worst month in history, surpassing the October 1997 IMF Crisis (-27%) and the October 2008 Global Financial Crisis (-23%) 📉 📉 Source: Barchart
SOUTH KOREA'S STOCK MARKET JUST HIT THE CIRCUIT BREAKER... AGAIN.
The KOSPI plunged 8%, triggering a market-wide trading halt for the 9th time this year. Roughly ₩500 trillion in market value disappeared in a single session. Three major shocks hit at once: • China's DUV chip breakthrough is raising concerns that South Korea's long-held memory chip advantage could come under pressure. • A US semiconductor selloff, driven by fresh questions around Nvidia's financing structure, spilled into Asia. Samsung and SK Hynix both dropped more than 12–14%. • Iran denied reports of peace talks with the US, reigniting geopolitical fears and pushing investors into risk-off mode. The impact is amplified because Samsung and SK Hynix account for more than half of the KOSPI's market capitalisation. When the chip giants fall, the entire index follows. Adding fuel to the selloff, record retail leverage is forcing liquidations, accelerating the decline and turning a sharp correction into a full-scale market rout. Source: The Macro Paper
Japanese Retail Traders have now built the largest U.S. Dollar short position since the Global Financial Crisis
Source: Barchart
Massive sell-off in Asian Markets this morning (and Korea market was closed)
Over $970 billion has been wiped out from Asian stock markets today. 🇯🇵 Japan: $350B erased (51 trillion yen) 🇨🇳 China: $360B erased (¥2.6 trillion yuan) 🇭🇰 Hong Kong: $110B erased (HK$860 billion) 🇹🇼 Taiwan: $140B erased (NT$4.1 trillion) 🇦🇺 Australia: $10B erased (A$15 billion) Nearly $1 trillion has been wiped out across Asia in a single trading session. Source: Crypto Rover
JAPANESE STOCKS JUST ENTERED A TECHNICAL CORRECTION:
The Nikkei 225 dropped -4% on Friday, now more than -10% below its June 25 peak, marking a technical correction and its worst weekly loss since April 2025. The broader Topix fell -2.7%, with Tokyo Electron alone contributing the most to the decline after sliding -8.2%. Market breadth was weak, with 810 stocks falling versus 788 rising and 39 unchanged. This comes as investors grow increasingly concerned that AI-related capex is outpacing returns, after Taiwan Semiconductor, $TSM, fell despite raising both its spending and revenue targets, mirroring Samsung's selloff earlier this month despite beating earnings estimates. Kioxia Holdings led the losses, plunging -16%, its biggest one-day drop since November 2025. Its market capitalization has now been cut in half in just one month after briefly becoming Japan's most valuable company. AI euphoria across semiconductor sector is unwinding rapidly. Source: Global Markets Investor
South Korea's KOSPI stock market trading has been halted for 20 minutes after crashing -8%.
Over ₩488,000,000,000,000 ($328 BILLION) has been wiped out from South Korean stocks today. Source: Bull Theory
